The company's chief executive, Nick Bowen, also quit onWednesday after more than 12 years at the helm, taking the fallfor the firm's second big hiccup in two years.

Macmahon took longer than some rivals to admit the tide hadturned on Australia's resources boom, as miners from BHPBilliton down to the smallest players have been hit byrising costs, falling demand from China and a strong Australiandollar.

The profit warning came just a month after it said it wasexpecting profit to grow 20 percent in the year to June 2013.

"I thought they were too bullish a month ago, but they'veobviously hit reality," said Scott Murdoch, an analyst at brokerRBS Morgans.

Macmahon, which is also a mining contractor, said it nowexpects full-year profit after tax will be between A$20 millionand A$40 million, down from its forecast last month that profitwould grow by 20 percent to around A$67 million ($69.99million).

The company said it had shot itself in the foot by taking ontoo much work in Western Australia, a hotbed of A$197 billion($206 billion) worth of mining and gas projects that have beenhurt by shortages of skilled labour and tight equipmentsupplies.

"No doubt, the whole industry's been stretched, particularlyin Western Australia (WA), where you've had the iron ore boomingand also the LNG," Macmahon's new chief executive, Ross Carroll,told analysts and reporters on a conference call.

"Our WA business here, in particular, grew too strongly, andin the end we couldn't handle it," he said.

The company said it expects to break even or report a smallloss in the first half, hit by rising costs to complete an ironore rail project it is working on for Rio Tinto ,just a month after reporting a record profit.

PROJECT DELAYS

Macmahon also said it has been hurt by delays on the RoyHill iron ore mine being developed by Australia's richestperson, Gina Rinehart, and delays in work on the Abbot Pointcoal terminal in Queensland.

The cost blowouts on the Rio Tinto project are similar toproblems Macmahon had two years ago with iron ore rail work itdid for BHP Billiton's Rapid Growth Project 5.

"Investors were just regaining a little bit of confidencepost-RGP 5 and this will reverse that," said Murdoch of RBSMorgans.

Macmahon shares, 19 percent owned by rival and topshareholder Leighton Holdings, slid 48 percent to aneight-year low of A$0.275, after coming off a two-day tradinghalt. They last traded down 41 percent at A$0.315.

"We are very disappointed with the downgrade news fromMacmahon, however we remain a supportive shareholder," aLeighton spokesman said in a comment emailed to Reuters.

Carroll, formerly head of the group's mining arm and chieffinancial officer before that, was appointed CEO to replaceBowen.

Bowen said he resigned of his own accord because he wasultimately responsible for the profit-forecast downgrade.

"The decision is mine and mine alone," he said in astatement, adding that he remained a top-10 shareholder of thecompany, owning a 3.2 percent stake.

Other drilling and mining services firms that have been hitby mining project delays and mine production cuts over the pastmonth include Boart Longyear, NRW Holdings,Calibre Group, Emeco Holdings and Ausdrill.

CEO Carroll said the company would look to cut costs, whichmay involve job cuts, as it deals with tougher negotiations withits mining clients, who have already started cutting what theyare willing to pay on contracts.